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A Fresh Look at Marketing Efficiency

Many companies are looking for ways to get more value for their marketing dollars, but their motivations for doing so vary. Some companies are searching for ways to unlock dollars to fund bigger media buys in order to reach ambitious growth goals. Others have found that their marketing budgets have grown faster than their revenue, and they face investor pressure to rationalize costs.

Whatever the management motivation, how do the world’s best-in-class companies get better value? By making their working media and nonworking media spending more efficient.

To drive marketing efficiency, companies must approach each major category of spending differently:

  1. Media. Companies frequently have opportunities to maintain their same reach and frequency at a lower cost through better media planning. By working with the media agency to create a media efficiency blueprint, clients can often drive cost savings, freeing up dollars for reinvestment. In instances where these collaborations do not deliver desired results or media planning has been unsatisfactory, companies typically embark on an RFP to test the market for alternatives.
  2. Agency Fees (Negotiations). Marketing executives have traditionally relied on agency negotiations, through procurement, to reduce costs and improve profitability. This approach still holds great value, but it must broaden its scope beyond numbers. Are rates consistent and fair? Are contracts clear and transparent?
  3. Agency Fees (Internal Processes). Many businesses overlook how their own internal systems and approach can affect marketing effectiveness and efficiency. Are you creating more new content than you need? How well are your agencies briefed on projects and brand strategies?

Such marketing efficiency initiatives can deliver significant results. Depending on the starting point, the savings can exceed 20%—money that can be redirected toward working media to drive top-line growth or taken to the bottom line as profit.

Several critical questions can show marketing executives whether they have a marketing efficiency opportunity:

  • What is your working versus nonworking spend ratio, and is it still effective?
  • Are your marketing costs growing faster than your revenues?
  • Do you know how many agencies you’re working with?
  • How long has it been since you tested the market to ensure you are getting effective media planning and competitive media buying and creative rates?
  • Is there a process in place to regularly evaluate each agency and its value?
  • Who within your organization has the authority to contract with agencies?
  • Do you have a standard, consistent, explicit marketing process across brands, business units, and geographies?
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